Overview
The **Alberta corporate tax rate** has undergone significant changes in recent years, impacting businesses operating within the province. Understanding these adjustments is crucial for effective financial planning and compliance, as the rate directly influences a company’s tax liability and overall profitability.
This overview provides a concise summary of the key aspects of Alberta’s corporate tax landscape, highlighting the current rates and their implications for various business structures.
- Current Rate: Alberta currently maintains a competitive general corporate income tax rate, designed to attract and retain businesses within the province.
- Historical Changes: The provincial corporate tax rate has seen fluctuations, with notable reductions implemented to stimulate economic growth and investment, as further detailed in corporate tax changes.
- Small Business Deduction: Eligible small businesses in Alberta can benefit from a reduced tax rate on their active business income, providing significant tax relief.
- Impact on Businesses: Changes to the corporate tax rate directly affect a company’s after-tax profits, influencing investment decisions, job creation, and overall economic activity.
Navigating Alberta’s Corporate Tax Rate Changes with KWB
In addition to personal income tax increases, the Alberta NDP government has also increased general corporate tax rates.
However, businesses that earn $500,000 or less of active business income will not be affected by the tax increases due to an offsetting increase to the Alberta small business deduction rate. Businesses that have more than 500,000 of active income or that have to share the small business deduction are affected. As well, any investment income earned in an Alberta corporation will be affected in a similar way.
The corporate tax rate increases will be effective as of July 1, 2015 and, therefore, corporate year-ends which straddle this date will be subject to a pro-rated tax rate. The new Alberta corporate tax rates applicable to an Alberta corporation with a December 31 year-end are 11.01% in 2015 and 12.00% for 2016 and subsequent years.
To read about changes to the Alberta personal tax rates, click here.
Thanks to Richard Ouellette of KWB Chartered Accountants for providing this content.
If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.